UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Date of report (Date of Earliest Event Reported: (10-15-2001)
GENERAL MOTORS ACCEPTANCE CORPORATION
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(Exact name of registrant specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
1-3754 38-0572512
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(Commission File No.) (I.R.S. Employer Identification No.)
200 Renaissance Center, Detroit, Michigan 48265-2000
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313-665-6266
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(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS
General Motors Corporation Ratings Lowered; Off CreditWatch; Outlook Stable
On October 15, 2001, Standard & Poor's lowered its ratings on General Motors
Corporation (GM) and their related entities. All of GM's ratings are removed
from CreditWatch, where they were placed on August 17, 2001. Standard & Poor'
has revised the outlook for GM from CreditWatch with negative implications to
stable.
Standard & Poor's stated its downgrade reflects concerns about the long-range
profit potential of GM in light of secular deterioration in industry
fundamentals. Standard & Poor's also stated intensifying price competition in
the companies' core North American market has resulted in significant declines
in profitability this year, notwithstanding industry demand that has been far
stronger than previously assumed. Standard & Poor's says this bodes ill for the
company's future financial performance, if--as Standard & Poor's now
anticipates--a more pronounced cyclical downturn unfolds.
Moreover, Standard & Poor's believes GM faces the prospect of diminished
earnings contributions from their sport utility vehicles and pickup trucks,
which have accounted for a disproportionately large share of overall profits,
given the ongoing proliferation of competing product entries, coupled with
slower demand growth.
Standard & Poor's also stated that in order to better confront these challenges,
GM is accelerating its cost cutting efforts in North America--which Standard &
Poor's believes could entail costly rationalization of production
capacity--while also seeking to enhance the effectiveness of their new product
development activities. According to Standard & Poor's, it is highly uncertain
if such actions will be sufficient to overcome adverse industry developments..
Standard & Poor's believes GM is diversified geographically. However, Standard &
Poor's says GM's non-North American automotive operations are currently not
meaningful contributors to earnings or cash flow, and this is likely to remain
the case for the next few years. Also, Standard & Poor's said GM's European
operations have generated heavy losses since mid-2000, and management has
indicated that an extensive restructuring plan is currently being developed.
Further, Standard & Poor's said the economic environment in Latin America is
deteriorating, and this will likely preclude further recovery of the important
Brazilian market.
Additionally, Standard and Poor's believes weaker operating cash flow, coupled
with acquisitions and distributions to shareholders, have resulted in a
significant reduction in the liquidity position of GM. Moreover, Standard &
Poor's stated GM has large unfunded benefit obligations. Also, Standard & Poor's
believes a particular concern for GM is the option of Fiat SpA to put to GM its
remaining 80% stake in its unit, Fiat Auto, starting in 2004. (GM acquired 20%
of Fiat Auto last year for $2.4 billion.) Standard & Poor's had viewed GM's
remaining 33% ownership interest in Hughes Electronics Corporation as an
important potential source of liquidity, but the value of this stake has eroded
drastically in recent months.
According to Standard & Poor's, further rating changes within the next few years
are unlikely. Standard & Poor's stated the current ratings take into account the
expectation that financial performance could be relatively weak for a sustained
period, but also incorporate the assumption that restructuring actions will
eventually restore earnings and cash flow to more acceptable levels. In
conclusion, Standard & Poor's stated although GM is expected to have diminished
access to the commercial paper market, their overall financial flexibility
continues to be above average because of their remaining cash positions, ample
contractually committed credit facilities, exceptional capital markets access,
and ability to securitize finance assets.
RATINGS LOWERED AND REMOVED FROM CREDITWATCH
To From
General Motors Corporation
Corporate credit rating BBB+ A
Short-term corporate credit rating A-2 A-1
Senior unsecured debt BBB+ A
Equipment trust certificates BBB+ A
Commercial paper A-2 A-1
Senior unsecured shelf debt (perlim.) BBB+ A
General Motors Acceptance Corporation
Corporate credit rating BBB+ A
Short-term corporate credit rating A-2 A-1
Senior unsecured debt BBB+ A
Commercial paper A-2 A-1
Senior unsecured shelf debt (prelim.) BBB+ A
Standard & Poor's Commercial Paper Rating Definitions
A-2 Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues
designated `A-1'.
BBB+ Debt rated `BBB' is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf the
undersigned hereunto duly authorized.
GENERAL MOTORS ACCEPTANCE CORPORATION
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(Registrant)
Dated: October 16, 2001 By s/ GERALD E. GROSS
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(Gerald E. Gross, Controller)